FILED

NOT FOR PUBLICATION

APR 25 2018

UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

PAUL EVERT’S RV COUNTRY, INC.; No. 17-15730 et al., D.C. No. Plaintiffs-Appellants, 1:15-cv-00124-WBS-SKO

v.

MEMORANDUM*

UNIVERSAL UNDERWRITERS

INSURANCE COMPANY,

Defendant-Appellee,

v.

AARON LYON,

Cross-defendant-Appellee.

Appeal from the United States District Court for the Eastern District of California William B. Shubb, District Judge, Presiding

Submitted April 13, 2018** San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: KLEINFELD, W. FLETCHER, and TALLMAN, Circuit Judges.

Paul Evert’s RV Country, Inc. sues its insurer, Universal Underwriters

Insurance Company. In an underlying state action brought against Evert’s RV and

defended by Universal, the court awarded punitive damages against three Evert’s

RV employees for willfully defaming a competitor. Evert’s RV then filed this suit

against Universal, alleging breach of contract and breach of the implied covenant

of good faith and fair dealing. The parties stipulated below to the dismissal with

prejudice of each of Evert’s RV’s claims against Universal, except for the

indemnification claim based on the punitive damages award in the underlying

action. The district court entered judgment in favor of Universal on that claim.

We have jurisdiction under 28 U.S.C. § 1291 and affirm.

Under California law, “an insured may not shift to its insurance company,

and ultimately to the public, the payment of punitive damages awarded in [a] third

party lawsuit against the insured as a result of the insured’s intentional, morally

blameworthy behavior against the third party.” PPG Indus., Inc. v. Transamerica

Ins. Co., 975 P.2d 652, 658 (Cal. 1999). Allowing such recovery would violate

California’s “public policy against permitting liability for intentional wrongdoing

2 to be offset or reduced by the negligence of another[,]” and it would “defeat the

purposes of punitive damages which are to punish and deter the wrongdoer[.]” Id.

The California Supreme Court’s decision in PPG controls. It bars Evert’s RV from

obtaining indemnification from its insurer for the underlying award of punitive

damages assessed against Evert’s RV’s employees for their morally blameworthy

behavior.

To the extent Evert’s RV seeks a separate punitive damages award against

Universal for Universal’s conduct in defending the underlying action, that claim is

not before us. Evert’s RV stipulated below to the dismissal with prejudice of each

of its claims against Universal, preserving only its claim for indemnification by

Universal of the punitive damages award against Evert’s RV in the underlying

action.

Appellants shall bear the costs of appeal. See Fed. R. App. P. 39(a)(2).

AFFIRMED.

3